North Kansas City Hospital: A jewel that city officials would like to cash in on

A big, developing story that many area residents might not be paying much attention to is the future of North Kansas City Hospital.

I’ve been following the developments closely, partly because the long-running story of Northtown, as it’s called, has been mesmerizing. It goes like this:

Small, humble city on the edge of Downtown Kansas City stumbles into wealth after casino gambling comes to town, and proceeds to plow through its treasure trove and find itself in worse shape than before it got rich.

The story’s arc is like that of a modest family that wins the lottery, starts buying fancy cars and lavish homes and then finds itself in dire straits. The family members are left looking over their shoulders, saying:

“How in the hell did we let that happen?”

Long story short, North Kansas City has burned through millions of dollars in casino revenue, and city officials now want to sell the hospital, which the city owns but is under the control of an independent board of trustees.

The hospital’s value? An estimated $500 million.

Thus, a battle royal is underway: On one hand, the City Council is doing everything it can to gain the right to sell the hospital, while, on the other hand, most citizens and hospital officials are striving to build a legal moat around the facility, which was built in 1958.

***

I have a slightly more than passing interest in this battle.

First, my wife Patty and I own a building in the 1300 block of Swift Avenue, where Patty operates a clothing manufacturing business. We’ve owned the building for more than 10 years, and North Kansas City has proved to be a great place to do business…It is quiet, safe, and city services have been excellent.

Second, my primary care physician is with North Kansas City Internal Medicine, which has its offices adjacent to the hospital. Fortunately, I’ve never been hospitalized there, but it’s entirely likely that I will be some day.

If and when I am admitted to NKC Hospital, I don’t want it to be owned by a mega corporation like Hospital Corporation of America (HCA).

If I have to be in a hospital for an extended stay, I want it to be one where the emphasis is on patient care, not cookie-cutter systems designed to generate as much money as possible from operations.

That’s not to say NKC Hospital isn’t financially successful; it is big, and it generates lots of revenue.

But now…back to the riches-to-rags story of North Kansas City.

After Missouri voters approved legalized gambling in 1992, Harrah’s planted its “boat in a moat” at Chouteau Trafficway and Missouri 210 (eastward extension of Armour Road). At its peak, North Kansas City was taking in $11.5 million a year from the casino, including $1 for every person who entered the casino to gamble.

For a while, everything was great: The city was flush and city services were impeccable. (I remember several years ago, when the city put new sidewalks in on Swift, when the existing sidewalks still looked pretty good.) But after Gene Bruns was elected mayor in 1997, the city went on an extended spending spree.

Among other things, the city built a gigantic community center — perhaps the biggest in the metro area — on Armour Road, not far from City Hall; it spent $10 million for properties near Armour Road and I-35 for a mixed-use development; and it built its own fiber optic network at a cost of $13.5 million.

Here’s how those investments have fared, as reported by Everly and Prang:

— During the 2011-2012 fiscal year, the community center had revenue of $1.1 million and operating expenses of $2.6 million.

— The mixed-use development has not come to fruition.

— The fiber optic network lost more than $1 million during 2011 and 2012.

The city partied on for most of Bruns’ 12 years in office, which came to an end in 2009.

Everly and Prang were not able to reach Bruns (I wonder why), but, according Elizabeth Short, who preceded Bruns, he made his intentions clear early on.

“He told me, ‘You got the money, and I get to spend it,’ ” she recalled.

***

It’s too bad the citizens of North Kansas City didn’t catch on to Bruns earlier and nip him and his councils in the bud.

But the damage has been done, and now North Kansas City residents and their elected representatives in Jefferson City are trying to prevent the worst possible development.

Recently, state Sen. Ryan Silvey introduced a bill that would allow the hospital’s board of trustees to vote to become an independent, nonprofit corporation. In addition, if five percent of the city’s registered voters signed a petition calling for the hospital, to go to nonprofit status, the question would be put to North Kansas City voters.

State Rep. Jay Swearingen told The Star last month that he planned to introduce a similar bill in the House.

Let’s hope that city officials and lobbyists for corporations eyeing the last big independent hospital in our area are not able to convince — or buy — the favor of a General Assembly majority.

This is a story that deserves to be watched very closely, whether you live in Kansas City or North Kansas City…Grain Valley or Pleasant Valley.

Advertisements

Like this:

LikeLoading...

Related

18 Responses

Fitz,
I covered Northtown for The Star from 1999 until my layoff in September of 2008. One of the last stories I wrote happened to be the NKC Council’s approval of its 2008-2009 city budget. Call me pathologically organized but I photocopied every story that I wrote during most of my 20 years at The Star and am looking at this budget story now.

That fiscal year, the city had a $46.8 million budget. The biggest expenditure was $12 million for the acquisition of properties in the area south of Armour Road, or Missouri 210, and east of Interstate 29/35. That property acquisition was an attempt by the city to redevelop that area. A Con Agra grain elevator occupied much of that land, but another chunk of it had been cleaned up by the EPA because of an old herbicide plant that dumped tons of poison into the ground over the years. Another $8 million was earmarked for various other property acquisitions and capital improvements, one of which included a new fountain in the city’s town square.

The remainder of that budget comprised that city’s operating expenses, of which $15.3 million went toward employee salaries. Harrah’s revenues for that fiscal year were projected at $9.4 million, slightly less than the actual revenues for the previous fiscal year. Keep in mind, of course, that these projected numbers came out right before the Stock Market crash and the ensuing Great Recession. Also, the city had a fund balance in that budget of $4 million and had added $50,000 from a property levy increase.

Obviously, I don’t know what happened after that. I don’t live north of the river and did not stay in touch with any of my sources from the city.I do know that the city did spend a lot of money in transforming itself, especially with the community center, expansion of the library, the Internet service, expansion of its police headquarters and demolition of the old Northgate Village apartments. It also helped out NKC High School by purchasing air conditioning units and rehabbing its venerable football stadium. I thought that Northtown was a perfect place for this kind of renaissance. It’s so close to downtown KC and really is the only place north of the river that resembles Brookside/Waldo. I thought that the new Northgate Village would attract a lot of new residents.

I was shocked when I read Steve Everly’s story. Initially, I was worried that I had been asleep at the wheel during my final years at The Star and so I e-mailed Steve. He assured me that the city’s financial problems surfaced after my departure, which has me wondering if The Great Recession caught up to Northtown.

One other thing of note is that when I covered Northtown, there was very little friction on the City Council and I frequently attended their weekly meetings. If I missed a meeting, I always called the next day to find out what happened or read the meeting minutes. Gene Bruns was mayor the entire time I covered the city and there was very little friction between him and the other council members. Granted, many of them were old-timers who had known each other for ages. The city has only about 4,700 people and all the residences are north of Armour Road. Toward the end of my time at The Star, there was a small business owner named Sam Scarfino who really started challenging Bruns, some of his initiatives and the way he was using the Harrah’s money.

I never covered much of the city’s business with the hospital but then again it was never really an issue during my time there. Anyway, you’re right in that this is an interesting story.

Very interesting information, Mike. Thanks. Not only do you remember everything from your years at The Star, you kept copies of everything! You’re in the perfect business now (para-legal) for record keeping and attention to detail.

I’m sure the Great Recession had a major impact on Northtown, and the increased spending occurred incrementally and showed itself as runaway spending only in retrospect. However, conspicuous signs of consumption were there, before everyone’s eyes. Every time I have driven by that community center — from the time it was under construction until the present — I have wondered why North Kansas City needed such a massive, luxurious center and how it could afford the maintenance.

The razing of the Con Agra grain elevator (just completed in the last few months) was another — although less conspicuous — symbol. You had to know the background to appreciate that (which I didn’t).

In any event, restraint and caution were not the guiding principles during those heady years. It was “party on!”

I would hate to see the hospital get sold. My 94-year-old grandmother recently had her first-ever extended hospital stay there and they took excellent care of her. A few months ago, she made the mistake of going outside. She slipped and fell. Her regular physician, who is at Research, told her it was nothing. Days later, she was still in terrible pain and had stopped eating. My dad, aunts and uncle took her to NKC Hospital where the emergency room doc immediately found out that she had suffered a compressed back fracture. They fixed it, kept her hospitalized until she had gained some weight and gotten her strength back. Don’t know if she would have received that kind of care at a for-profit conglomo.

I’m sorry to hear about your grandmother, Mike. If I make it to 94, I’ll want to get outside, too…I don’t know that many people who have had stays at NKC Hospital, but those whom I’ve talked to have had nothing but praise.

That hospital should not be treated like shares of stock, salable at the whim of politicians who see a big, fat asset they’d like to liquidate. If it is sold, you can almost be sure that North Kansas City would blow the money over a period of years. Many elected officials cannot resist indulging their supporters with paybacks. On the other hand, if they have only a modest amount of revenue at their disposal, they are forced to make difficult decisions about cutting, as well as spending. Best to keep the lucre out of the hands of people who like to spend other people’s (the public’s) money.

Great reporting and comments, Fitz and Mike! Just another lesson about the lack of fiscal discipline among the ruling class, where spending money is an aphrodisiac. It’s unfortunate that your former employer doesn’t raise much scrutiny about the wreckless spending habits in KCMO, or Washington DC for that matter. I’ll bet if the Mayor and President were “white,” they would. Apparently any criticism, constructive or otherwise, of a minority leader is forbidden at The Star.

I have a number of friends that live in NKC. Like you, they are passionate about the hospital and don’t want to see it change hands. They are, if necessary, ready to rumble.

Sen. Silvey and I, after talking with the city, the hospital and the residents of Northtown, drafted the compromise legislation together. He filed his Senate bill last week. I filed my House bill this week. Both are identical.

A friend of mine ‘retired’ several years ago and took part-time work at the hospital.

He just told me the other day that at an employee meeting they were told the hospital is ‘bleeding money’, though he and others feel what they actually did was overextend themselves with construction projects and buying up doctors’ practices…

The above to be consumed with a cowlick of salt..

Obviously the hospital has hired multiple consultants to figure out how to stay independent. June is the expected implementation date for the consultants recommendations.

Nevertheless, I’ve got to think they’re in pretty good shape, or will be in a few years, assuming they make smart business decisions…I trust that The Star will report on the consultants recommendations and whatever course the hospital board takes.

The following was written by Sen. Silvey and myself. Thanks for following the story.

North Kansas City Hospital should neither be sold to a for-profit healthcare group, nor should it remain as a Chapter 96 hospital. The time for the former may never come, and the time for the latter has passed.

(Editor’s note: One provision of Chapter 96 of the Missouri Revised Statutes authorizes North Kansas City to appoint members to the hospital’s Board of Trustees. The city has not appointed a new trustee since 2009 but currently is trying to add several.)

North Kansas City Hospital is one of six “municipal” hospitals in the state organized under Chapter 96 of the Missouri statutes. But the hospital is unique in Missouri for two significant reasons. First, it is by far the largest of these hospitals and has significantly outgrown the “municipal” mantle. Second, it has not taken one dime of tax dollars from the City of North Kansas City in over 33 years.

In 1954, residents of North Kansas City not only voluntarily contributed hundreds of thousands of their own dollars to start a hospital, they also petitioned the city to hold an election to use the city’s taxing authority to increase their property taxes by two cents per $1,000 in valuation. That assessment generated about $300,000 for the hospital. The hospital also benefited from an additional $1.7 million or so in municipal bonds. But for the last 33 years there have been no city tax dollars used for the maintenance or operation of North Kansas City Hospital.

It is for these reasons that we feel North Kansas City Hospital is in no way an asset of the City of North Kansas City that can be sold with a vote of its city council.

The hospital is not owned by the City of North Kansa City nor by its residents. It was started with the help of the city and its residents, who saw the need for a Northland hospital, but for more than half a century it has been operated well by a competent and compassionate hospital board comprised of North Kansas City residents and healthcare professionals. Credit for the success of North Kansas City Hospital goes solely to that board and the talented staff they guide.

The amount of money being spent on the lawsuit resulting from the rumored sale is costing our region millions of dollars that could better be spent on healthcare, public safety or parks.

The hospital staff asked us to see if there was a legislative compromise that could help get this event out of the courts and solved.
While talking with North Kansas City, the mayor and city administrator made two things perfectly clear to us: The city no longer wants to be in the healthcare business or tied to the success or failure of the hospital, and they want to be sure that the hospital has a well-thought-out plan to successfully navigate the significant changes in the local, state and national healthcare environment.

The hospital wants to remain a community hospital without shareholders and would like to be free from Chapter 96 and the disadvantages that creates for them in the marketplace, such as open records acts, which enable their competition to get detailed information.

Our first thought was to just get back to the way things were before the issue of a sale was raised. But that does not help the city or the hospital meet their goals. The status quo is no longer an option. And the instability caused by the rumored sale of the hospital has had a detrimental effect on the operation of the hospital — from hiring new doctors to negotiating contracts.

That uncertainty will regrettably persist as long as the relationship between the city and the hospital remains as it is today.
The goal of North Kansas City Hospital has never been to make money. It has no shareholders for whom it is required to create wealth. And for the future well-being of the Northland, we hope that it will never be sold to a for-profit healthcare conglomerate more interested in making money than providing quality care.

We were presented with the argument that a sale would be good for the region. It would put the hospital back on the tax rolls, lessening the tax burden on other businesses, and the proceeds of the sale could be used to create a healthcare foundation that could be used to the benefit of the Northland. (Proceeds from the sale of the hospital can ONLY be used for healthcare purposes.)

While these seem like laudable goals, after reflection we realized the costs of a sale outweigh the benefits. If the hospital is sold, the Northland would indeed have a private, tax-paying hospital. But that hospital would change the fundamental purpose of our community hospital; it would be making decisions based on profit, not people. And instead of spending all of its money on healthcare for the Northland, the hospital (under its new owners) would have to devote some of those resources to recouping the expense of the recent purchase.

In return the Northland would get a well-funded healthcare foundation run by the city council, which wants to exit the healthcare industry.

We, along with the vast majority of North Kansas City residents, therefore oppose the idea of a sale of the hospital to a private, for-profit organization.

Instead, we propose the following solution that helps all parties meet their goals:

A change to the Missouri statutes allowing now or in the future the board of directors of any very large Chapter 96 hospital which has not benefited from municipal taxes in more than 20 years to vote to move their charter from a municipal hospital to a private, non-profit hospital. Or, failing that, allowing the residents of cities with Chapter 96 hospitals to put the matter to a vote by means of an initiative petition (signed by five percent of the city’s registered voters).

This option most closely resembles the status quo. Residents would see no change, and the name, the board and the staff would all stay the same.

We recommend a few other safeguards to help meet goals and protect stakeholders. First, a multi-year plan for the hospital, produced by a third party and paid for by the hospital, must be created and made available to the public prior to any vote. Second, the new version of the hospital could not be sold for at least 15 years, and after that, a proposed sale would require approval of North Kansas City residents at an election. Third, half the board of the hospital would have to come from Clay County, and half of the Clay County representatives would have to be North Kansas City residents.

We have filed legislation that reflects these proposals. It is our intent to get this legislation through the House and Senate this session to end the lawsuit and stop the outflow of money being spent on court costs and attorneys’ fees.

Fitz,
I have a family member that works at NKC Hospital as a nurse. She is very much against the sale.

As for your fear that an HCA hospital would not treat you well, I can only type about my experience. With a serious health issue (I was three minutes from death) and taken to an HCA hospital, the triage unit was independent of HCA. The triage doctor leased the space, close to the entrance (thank God). I think we spoke about this at Gates recently. They could not have handled my care any better.

I cannot speak to this city’s politicians and the spending of gaming cash. But almost all politicians are thieves — an opinion that people can agree or disagree with. Ask the folks in NKC about the mayor that decided he would spend the gaming cash.

I hope what happens is best for the people of NKC, Patty’s business and your PCP next to the hospital.

I will let you know if you are hotter than the Black Hawks later; they play tonight.

And you did not know the nagging, consistent chatter “rock and fire” was before going to Google?

Larry — Research and the other HCA properties have some tremendous doctors and nurses and I wouldn’t be too worried if I ended up at one of those facilities…Not many hospitals have the option of staying independent these days, and I’d just like to see a few of those remain.